The pensions industry is being asked by the main regulatory bodies for input on how to improve the consumer pension journey.
This call for feedback is being made by The Pensions Regulator (TPR) and Financial Conduct Authority (FCA). They are seeking information on how consumers make decisions about their pension at key points throughout their working lives.
The regulators said it hoped this call would prompt a broad discussion within the industry, and lead to insights that can shape future targeted regulatory interventions.
The regulators said that since the launch of automatic enrolment in 2012, there has been a seismic shift in the pensions landscape, with 15 times as many savers in accumulation within defined contribution schemes when compared to accumulation within defined benefit schemes.
This shift means savers carry more of the risk in planning for their retirement and have more decisions to make than before.
As a result, The Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) are working to explore the factors affecting how consumers save for their retirement and to find ways to improve the journey from joining the workforce to retirement.
This call for input is asking for information on both the passive and active decisions people make at different stages of their lives. These include starting a pension, building up funds, approaching retirement, accessing their pension and spending pension savings.
TPR interim director of strategy and risk Richard Edes says: “The past decade has seen a pensions revolution with many more savers now putting something away for retirement.
“But decisions made by savers, some that they aren’t even aware of, can have a significant impact on the kind of retirement outcomes they can expect.
“That’s why we want views on how we can improve the pensions consumer journey, putting savers at the heart of all that we do and supporting them now and in the future.”
Sheldon Mills, executive director consumers and competition at the FCA adds: “Automatic enrolment and pension freedoms have changed the pensions landscape.
“It is important our regulation keeps up with what is happening in reality. We want to hear about what is working well and where the consumer journey can be improved.”
This initiative has been broadly welcomed by the industry. Phil Brown, director of policy at B&CE, the provider of The People’s Pension, says: “The call for input from the regulators about improving the journey for pension savers is a welcome one. Our recent New Choices, Big Decisions research highlighted the need for the industry to focus on how it can shift the burden of risk away from savers who are currently faced with difficult, complex decisions about what to do with their defined contribution pension pots in retirement.”
The Pensions and Lifetime Saving Association (PLSA) director of policy and advocacy Nigel Peaple adds: “It’s positive that FCA and TPR have done this joint call for input on the pension consumer journey.
“People struggle to engage with their pension for a range of reasons: complexity, behavioural biases, short-termism and a lack of confidence. While the regulators are right to think about the role they and the industry can play in addressing these issues, we should not forget the important role that Government policy can play in solving these issues.
“This is why the PLSA believes that the default level of automatic enrolment contributions should increase to 12 per cent around the end of this decade and that more support should be given to savers at retirement, as set out in our proposals for Guided Retirement Income Choices.”
This TPR and FCA said it was looking for responses from a braod range of parties including pension providers, trustees, consumer groups, academics, employers and trade bodies.